The story at VMworld is really not about the cloud despite the marketing love for the idea. That is if you call flogging a concept to death as marketing.

It’s not really the core issue. The real challenge is managing the risk of using virtualization and its effects on the entire business. That is most pressing for VMworld attendees.

It’s useful to have a vision of what you are moving towards. A major part of that vision is building an extended internal infrastructure or private cloud. There will be use for a public cloud but mostly for individual needs. And it may just be better that way. People will use a variety of services. They will use SaaS apps and outside infrastructures for test and development. But combining the two into a hybrid form seems hard to make sense of as a cohesive offering.

We talked a bit about this on theCube yesterday at VMworld.

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More important is to focus on the vision of offering IT-as-a-Service to provide better value for the lines of business, said Dave Floyer, co-founder of Wikibon.

This means understanding the potential and the value as the enterprise moves toward virtualizing its entire servers to manage critical apps. The theoretical value is higher but the risks are greater.

A conversation is needed with the lines of business and IT. The lines of business want low-cost and performance, which often lead them outside the enterprise. Their risk is in using services that IT does not control. If there’s a problem, they can’t run to IT. In that respect, the lines of business and IT have a vested interest in working together, especially as the value of using virtualization for critical apps becomes more evident.

The VM Monster

There is a problem, though. Business critical apps on a virtualized infrastructure provide a home for a monster. It’s fine to have a powerful monster but irritate it and the beast will unleash its fury.

The monster provides great powers when used effectively in a virtualized environment. The monster roars and ravages everything in its path when the CIO creates an environment that exposes the lines of business to security issues.

VMware CTO Steve Herrod says vSphere 5.0 has a monster virtual machine, powerful enough to manage critical apps. This poses an opportunity and a challenge for the CIO.

Floyer says these CIOs have to ask themselves some questions: “How do I get these fundamental economies of scale and how do I limit my expose myself to secure issues?”

To do that you can’t treat your data like a pile of spaghetti. As an example, human resources data raises security issues if mixed with the virtual data infrastructure.

“Your strategy with the data center has to be tailored to security requirements,” Floyer said.

Services Angle

VMware is moving more into the storage world with vSphere 5.0. The current architecture is antiquated. Customers are investing in storage arrays but performance problems persist. Storage is the issue.

International Business Times:

“We have spoken with a number of industry resources and vendors at the VMworld Solutions Exchange. In summary, the major enhancements with the vSphere 5 release are on the storage side and we believe many of the new capabilities are aimed at larger environments / organizations which raises competitive questions,” said Aaron Schwartz, an analyst at Jefferies.

The cloud is part of the story but the real issues right now are about managing the risk as more critical business apps become part of the enterprise and its virtualized infrastructure. Storage is a big part of that issue and will continue to be so for many years to come.